moon 2007-1-8 11:09 AM
17 firms are targeted in fund misuse probe
CHINA'S securities watchdog has begun an investigation into 17 mainland-listed companies that allegedly misappropriated 9.2 billion yuan (US$1.15 billion) in corporate funds and failed to return the money, officials said yesterday. X4l7yd
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China's Securities Regulatory Commission had given the firms until the end of 2006 to make good on their debts.H _&W S'k%T1I
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The targeted companies include the Sanjiu Medical & Pharmaceutical Co, China Textile Machinery Co and Hebei Baoshuo Co.
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Executives who misappropriated funds in these companies for their own benefit will be prosecuted, a CSRC spokesman said. s.f'\$z-W ?J n/jh
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Officials working for at least nine of the 17 companies face criminal investigation, the commission said, without identifying the firms. j4VR qB
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In all, 36 companies failed to meet the deadline to repay a total 14.6 billion yuan in misappropriated funds. But the other 19 companies have developed plans to recover the money and won't face further sanctions.
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Last year, 402 companies listed on the Shanghai and Shenzhen stock exchanges recovered 33.57 billion yuan that had been misappropriated by their controlling shareholders, authorities said.
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The recovery campaign was aimed at improving the quality of the country's 1,400 listed companies and safeguarding the interests of shareholders. g6r1^ rv}+@
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The misappropriation of large sums by controlling shareholders has long been a major problem afflicting China's stock markets, officials acknowledged.]h6U
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"It is a huge obstacle to the sound development of a listed company," a commission spokesperson said. @1C&oyT;o0N^
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As a result, some companies that should have enjoyed good earnings were hampered by cash-flow problems after their funds were siphoned off, the watchdog said.
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On October 19, 2005, the State Council approved guidelines drafted by the regulatory commission that required controlling shareholders to return all the money they had misappropriated by the end of 2006.`tar]
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In October last year, the commission also reiterated that corporate executives who misused funds must make a choice between returning the money or facing legal action.2gx1T'kQ&^I'[
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In a related move, China's prosecutors on Saturday vowed to intensify their crackdown on corruption, dereliction of duty and major economic crimes, Xinhua news agency reported.
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"The prosecutorial organs are improving their efficiency in dealing with major corruption cases and have punished a large number of government officials," said Jia Chunwang, procurator-general of the Supreme People's Procuratorate.
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In the last two months of the year, China's prosecutors investigated 32,369 cases involving 38,457 officials who were accused of taking bribes or dereliction of duty. More than 17,440 cases involved large amounts of money, and 2,632 officials above the county-chief level were prosecuted or otherwise punished.